We have not exhausted our ammunition yet, assures RBI Governor

The Indian economy remains much stronger amid the coronavirus pandemic than it was during the global financial crisis over a decade ago even if growth has slowed, Reserve Bank of India governor Shaktikanta Das said on Thursday.

At the ‘Unlock BFSI 2.0’ event by business standard, the central bank governor said that the debt resolution framework is expected to give durable relief to the borrowers who are facing Covid-pertaining distress. He added, “We have not exhausted our ammunition, whether on rate cuts or other policy actions.”

He said that the government’s response to pandemic has been fiscally very responsible, prudent and calibrated. Once there is clarity on Covid-19 curve and other aspects, RBI will start giving its estimates on inflation and growth.

Das said, “Being overly risk-averse is self-defeating for banks.” On the rising number of banking frauds, Das said that there was enough space for enhancement in banks to avoid frauds.

The governor also said that at present, India’s financial sector is sound and stable but more needs to be done in terms of banking sector reforms. Thus, stressing the need for better governance culture and risk management practices at banks.

He added that RBI has asked banks to build strong buffers and raise capital at a time when bad loans are expected to rise.